Jakarta, CNBC Indonesia – The sluggish gold last year this year will steal the stage in global financial markets this year. These signs were seen after gold was able to stay above US$ 1,800/troy ounce even though the central bank of the United States (US) will be aggressive in tightening its monetary policy.
In trading on Wednesday (19/1), gold was even able to skyrocket almost 1.5% US$ to the range of US$ 1,839/troy ounce. This level is the highest in the last two months.
In the last two days, gold is back down, although slightly. In a week, this precious metal successfully recorded a gain of 0.88% to US$ 1,833/troy ounce.
As is known in the minutes of the US central bank’s (The Fed) monetary policy meeting revealed in December, several top officials looked at the balance sheet value (balance sheet) can be reduced as soon as interest rates are raised.
This means that the Fed is much more aggressive than the market expects. Previously, market participants saw the Fed will raise interest rates 3 times this year, and as early as March.
The increase in interest rates is the main enemy of gold that can make its value decline. But in fact gold has successfully recorded two consecutive weeks of strengthening and returned to above US% 1,800/troy ounce.
Gold status as a safe asset (safe haven) as well as hedging against inflation will support the rise in this year, some even predict it will break all-time highs again.
At the beginning of this year when gold prices were depressed and returned to below US $ 1,800/troy ounce, Byron Wien, former head of investment at Morgan Stanley predicts gold could provide a surprising move by rising 20% and reaching US $ 2,160/troy ounce this year. . This level is certainly an all-time high. Wien is now vice president of Blackstone, a company with around US$ 650 billion in assets under management.
Wien sees that although the Fed normalizes its monetary policy aggressively, inflation will still remain high. Demand for gold as a hedge against inflation will increase.
“Gold prices rallied 20% to new record highs. Despite strong US economic growth, investors are looking for a safe and inflation hedge in gold. Gold will regain its status as a safe haven for new billionaires, even as cryptocurrencies eat away at the market.” said Wien, as reported by Kitco, Tuesday (4/1).
The potential increase in world gold prices was also mentioned by Jeffrey Gundlach, a billionaire dubbed “the king of bonds”. It remains bullish on gold for the long term. Moreover, currently Gundlach sees the risk of a recession due to rising interest rates in the US, as well as high inflation.
“Inflationary pressures are increasing, if we look at the economy, it is undeniably supported by quantitative easing and the expansion of the Fed’s balance sheet. And because it will disappear, then in 2022 there will be challenges faced for risk assets and of course the economy. Signals from the market bonds are starting to look like pre-recession,” said Gundlach, as reported by Kitco, Wednesday (12/1).
For the short term next week, analysts and market players predict that gold will surge again.
In a weekly survey conducted by Kitco, 16 of 18 analysts on Wall Street gave their projections bullish (uptrend) for gold in the next week. 2 other analysts gave projections bearish (downtrend).
While a survey of market participants called Main Street, with 1,134 participants, the results were 71% giving a bullish projection, 17% bearish and the rest neutral.
CNBC INDONESIA RESEARCH TEAM
(pap/pap)
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